Treasury Yield Curve Analysis

The 30-year Treasury rate held steady at 4.93 today, unchanged from yesterday but 10 basis points lower than last Wednesday when it stood at 5.03. This marks a notable decline at the long end of the curve over the past week. The rate has remained essentially flat compared to where it was a month ago, when it sat at 4.94. Investors have seen the longest maturity pull back modestly from recent highs.

Looking at the broader yield curve compared to one week ago, the picture is mixed with a clear divergence between the short end and long end. The shortest maturities showed little movement, with the 4-week rate dipping slightly to 3.68 from 3.69. The intermediate section from 2 months out to 1 year all moved higher, with the 6-month climbing 9 basis points to 3.91 and the 1-year rising 8 basis points to 3.98. Starting at the 5-year maturity, rates shifted lower compared to last week, with the 7-year falling 3 basis points, the 10-year dropping 6 basis points to 4.49, the 20-year declining 9 basis points to 4.95, and the 30-year down 10 basis points. The 5-year remained unchanged at 4.27.

Over the past month, the curve has undergone a significant transformation with substantial increases concentrated in the short-to-intermediate range. The 3-month rate rose 14 basis points from 3.69 to 3.83, the 6-month climbed 17 basis points from 3.74 to 3.91, and the 1-year jumped 25 basis points from 3.73 to 3.98. The 2-year and 3-year maturities saw the largest monthly increases, rising 33 and 34 basis points respectively to 4.20 and 4.23. The 5-year and 7-year also moved notably higher, gaining 28 and 20 basis points. The longer end of the curve told a different story, with the 10-year up a more modest 13 basis points, the 20-year barely changed at just 3 basis points higher, and the 30-year actually ticking down 1 basis point.

The curve has shifted to a notably inverted shape, with the 2-year yield at 4.20 sitting below the 30-year yield at 4.93. This inversion represents a deepening compared to last week when the spread between these maturities was tighter. The short end has risen sharply over the past month while the long end has remained relatively anchored, creating a pronounced downward slope from the 2-year through the 10-year before the curve flattens and turns slightly upward toward the 20-year. The 20-year at 4.95 sits just above the 30-year at 4.93, an unusual configuration that has persisted for several weeks. The steepest part of the curve now appears between the 1-year and 3-year maturities, where the slope is most pronounced.